The volume of entire warehouse sector has been pegged at a value of USD 7.8 bn with the exponential growth of 10 pc annually.
Warehousing and logistics are crucial factors for companies to gain a competitive edge. With the advent of modern manufacturing, which combines smart and effective products with advanced and innovative technologies, the very definition of warehousing and logistics has evolved to a much larger and integral concept.
With the projected growth in the Indian economy and altering business perspectives, the logistics and manufacturing sectors have moved beyond the rudimentary transportation of trade goods in the supply chain. The solutions include an about-face in the utilisation of warehousing to drive business profits.
The dynamic shift between manufacturing and warehousing
Warehousing has evolved in its role in the active supply chain. The volume of the entire warehouse sector has been pegged at a value of USD 7.8 billion with the exponential growth of 10 per cent annually. With manufacturing as the key pillar in the supply chain, it is also responsible for driving the warehousing industry.
According to a report released by Knight Frank, in FY19 alone there has been a spike of 77 per cent in warehouse leasing. Businesses are now taking yet another strategic step to drive profits through leasing warehouses to store the goods, thereby contributing to a major shift in the manufacturing leg of the supply chain.
Warehousing has been utilized by manufacturing companies to manage their inventory and storage needs since its inception successfully. In the current supply chain and retail scenario, warehouses utilization isn’t limited to being ‘just a traditional storage room.’ Warehouses today have evolved and double up as kitting and assembly hubs, contributing significantly in today’s competitive retail scenario.
Furthermore, with e-commerce players expanding their operations to meet the growing demands of the consumer, the need for warehouses has increased. There has been a sharp increase in warehouse occupancy in both, tier I and II markets, especially in states like Delhi NCR, Mumbai, Pune, Bengaluru, and Chennai.
Customised warehouses have allowed companies to speed up their delivery and assembly processes while investing lower capital on the core manufacturing process. With the introduction of warehouse automation, operations like picking, warehouse robots, barcode labels, and other technology-infused developments have allowed companies to cut manufacturing time and reduce expenses. It has also provided opportunities to reach out to compete at a global level by expanding to countries like the US, China, and others.
Modern warehousing software has developed effective techniques, reduced the need for high-cost labor, and operational expenses while fulfilling the customer needs. Some parts of manufacturing processes which were earlier performed in the company-specific plants like assembling parts are now possible through evolved warehousing utilization.
Modern Supply Chain
The evolution of the traditional supply chain ecosystem in India has been possible owing to customized warehousing developments. According to Make in India's database, the country’s rank has gone up from 54 in 2014 to 44 in 2018 in the World Bank’s Logistics Performance Index (LPI), relating to the overall logistics performance. With a current valuation of USD 160, the sector is expected to be valued at USD 215 billion in the next two years. Modern manufacturing doesn’t terminate when the products reach the warehouse. Storing, production, packing and shipping across different distribution channels with on-time delivery complete the supply chain.
Modern logistics and supply chain has complemented the manufacturing process by handling the operations which would have made the manufacturing process complicated and complex. By adding value to process right from the ‘Point of origin’ (managing the flow of raw materials) to ‘Point of consumption’ (managing the packaging, transportation, and delivery), logistics has defined what modern manufacturing is today.
The evolution in traditional warehousing powered by technology is not only impacting logistics but the supply chain as a whole. The retail market in India has revolutionized in time. With more companies entering the retail market, businesses have to invest more in processes that are cost-effective to produce results better than their competitors. Customized warehousing and logistics have allowed companies to invigorate their manufacturing process and make it more robust.
Furthermore, with the exponential increase in international trade, the modern supply chain processes are positively disrupting the global economy and reach. By complementing the end to-end manufacturing process, it has impacted businesses at the very core with a promising vision for the future.
By Aditya Vazirani, CEO, Robinsons Global Logistics Solutions